Bates v. Glenn
| Decision Date | 14 September 1953 |
| Docket Number | No. 2480.,2480. |
| Citation | 114 F. Supp. 445 |
| Parties | BATES et ux. v. GLENN, Collector of Internal Revenue. |
| Court | U.S. District Court — Western District of Kentucky |
E. J. Wells, Louisville, Ky., for plaintiffs.
H. Brian Holland, Asst. Atty. Gen., Andrew D. Sharpe, Henry L. Spencer, Sp. Assts. to the Atty. Gen., and Charles F. Wood, Asst. U. S. Atty., Louisville, Ky., for defendant.
This action was filed October 2, 1952 by the plaintiffs Theo. W. and Mary Louise Bates, husband and wife, against Selden R. Glenn, who was then Collector of Internal Revenue for the District of Kentucky, to recover $407.26, the amount of an assessment made by the Commissioner, representing a deficiency in income taxes for the calendar year 1948.
The case was tried to the Court without a jury September 1, 1953. The parties had stipulated substantially all of the facts, about which there was little dispute. From that stipulation and the evidence heard by the Court upon the trial, the Court makes the following
1. Plaintiffs Theo W. and Mary Louise Bates filed their joint income tax return for the calendar year 1948. After auditing of that return, the Commissioner made a deficiency assessment of $347.40 and interest, which assessment and interest on March 4, 1952 aggregated $407.26, which was paid by the plaintiffs.
The tax assessment arose out of adding to the income of the taxpayers disclosed in their return, the amount of $1,683.21, representing the agreed value of a Ford Automobile which Mrs. Bates received June 21, 1948.
2. June 18, 1948, Summers-Hermann, Inc., local Ford dealers in Louisville, Kentucky, exhibited the 1949 new Ford at their place of business. Summers-Hermann, Inc. had advertised the newspapers and otherwise that the new Ford would be exhibited on that date and invited the public to inspect the new car and as an incentive advertised that a new Ford would be given to some person visiting the showroom at their place of business on June 18, 1948.
3. In response to the advertisement some 27,000 persons visited the showroom, among whom were the plaintiffs, whose names were inquired and written on cards while they visited the showroom and at a drawing held late on that day, the name of Mrs. Mary Louise Bates was drawn from the whole number of names deposited that day in the barrel and representing visitors to the showroom, and on June 21st thereafter, a new Ford car was delivered to her at her home.
4. Neither Theo. W. Bates nor his wife Mary Louise Bates made any investment in the car, gave no testimonial concerning the car and the only dealings either of the plaintiffs had with Summers-Hermann, Inc., was going to their place of business on June 18, 1948 to view the new car, at which time their names were taken by one of the employees of the Ford dealers.
5. The value of the automobile, with its accessories, was charged as a deduction by Summers-Hermann, Inc., on account of advertising.
The value of the car was not included by Theo. W. and Mary Louise Bates as income in their income tax return for the calendar year 1948 filed by them on or about March 15, 1949.
6. Plaintiffs timely filed with the Collector their claim for refund and received no response from the Commissioner, and on October 2, 1952, filed the present action.
I. The defendant contends that the value of the automobile was taxable income under Section 22(a) of the Internal Revenue Code, while plaintiffs contend that the automobile was a gift exempt from income tax under Section 22(b) (3) of the Internal Revenue Code.
In this action the burden lies upon the plaintiffs, the presumption being that the Commissioner's determination was correct. There being no dispute as to the facts in this case, the Court's determination becomes solely a question of law.
Counsel for the Collector relies largely upon Willkie v. Commissioner, 6 Cir., 127 F.2d 953; Lunsford v. Commissioner, 6 Cir., 62 F.2d 740 and Robertson v. United States, 343 U.S. 711, 72 S.Ct. 994, 96 L.Ed. 1237.
The Willkie and Lunsford cases are referred to as indicating that the purpose and intent of...
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...section 22(b)(3), I.R.C. 1939. Petitioners claim this situation is like those in Pauline C. Washburn, 5 T.C. 1333, and Bates v. Glenn, (W.D., Ky.) 114 F.Supp. 445, affd (C.A. 6) 217 F.2d 535, and that the same result must follow, and the prize be regarded as a gift. Respondent relies on Rob......
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